Exits likely as IPO lock-in ends for Paytm, Nykaa

NEW DELHI:  Four leading listed startups- Nykaa, PB Fintech (Policy Bazaar), One97 Communications (Paytm) and Delhivery - will be under investors’ radar as lock-in periods of at least 10 companies are set to expire for pre-IPO investors this month.

The new-age company stocks have delivered a negative return of up to 70% to investors since listings and a further selloff by pre-IPO investors may bring down share prices even more in the coming sessions, according to market experts.

“It won’t be a surprise if we experience another Zomato-like sell-off with these stocks. They continue to incur huge losses and their path to profitability might get delayed due to unfavourable external environments,” said a senior analyst at a leading brokerage firm.

Zomato share prices had dipped by over 24% in 4 days when its lock-in period ended in July. Two leading investors in Zomato, Uber Technologies and Tiger Global, sold their stakes when the lock-in period ended. The analyst added that while Paytm, Nykaa and Policybazaar have shown improvement in their business in the September quarter, it still does not justify the valuation they were seeking.

“Add to it, some early investors, who were allotted shares at much cheaper prices, would like to cash in. Hence, there is definitely going to be pressure,” the analyst said. Sachin Dixit, an analyst at JM Financial, had recently remarked, “As new-age companies such as Nykaa, PB Fintech, Delhivery, and Paytm are expected to see their lock-in expire in November 2022, potential buyers might be spoilt for choice.” He added,

“There could be a sharp dip in share price even if a small set of investors decide to liquidate their position.” Nykaa’s, whose share prices have fallen over half of its 52-wek high, expiry date of pre-IPO investors will end on November 10. As per JM Financial, almost 31.9 crore shares are expected to open up for trade on November 10, including about 15.4 crore promoter & promoter group shares. Nykaa board earlier this week approved issuance of bonus shares, new ESOP and the stock unit plan.